The Billionaire Who Wasn't: How Chuck Feeney Secretly Made and Gave Away a Fortune
by Conor O'Clery
Public Affairs, 2007
337 pp., $26.95
Chuck Feeney is clearly a grand man, and he deserves a grander book than this. Feeney is the leading mind behind the multibillion-dollar success of Duty Free Shoppers (DFS); he has since plowed nearly all his money into The Atlantic Philanthropies. Feeney’s authorized biographer, Conor O’Clery, obviously admires him, but the Irish journalist has written a book that is little more than a long newspaper article. Its blow-by-blow account of Feeney’s business and philanthropic doings does not bring its idiosyncratic hero to life (nor, for that matter, his business partners, five children, or two wives). Strangely, although nearly all Feeney’s associates cooperated with O’Clery, he often quotes one person’s account of an incident without telling us whether the other person involved concurs.
Still, O’Clery has quite a story to tell, and donors especially should ponder it. Feeney was born in 1931 “into a struggling Irish-American family in the blue-collar neighborhood of Elmora, New Jersey,” the only son among his hardworking parents’ six children. His father, a daily Mass-goer and Knight of Columbus, and his mother, a Red Cross volunteer who worked as a nurse and cared for the family, exercised impressive charity toward others but would have considered themselves perfectly ordinary citizens—and, in their neighborhood, they probably were.
In 1948, fresh out of high school, Feeney joined the Air Force and was assigned to an intelligence unit based in Japan. He learned how to keep secrets, and taught himself Japanese: two lessons that would prove enormously consequential in later years. Even with the Korean War raging, he was planning for the future, thinking about the GI scholarship to which he was now entitled. He settled on Cornell’s School of Hotel Management, which appealed to his love of travel and entrepreneurial bent. It was a real stretch. Only one other student from his Catholic high school had gone on to university. Nobody in his family had ever been to college. He “was already showing a trait that would assert itself throughout his life: thinking big and aiming to achieve the best result, even if it seemed unattainable,” writes O’Clery.
The Hotel School was indeed a good fit. Though its students had Cornell’s lowest SAT scores, it outperformed the rest of the university at incubating entrepreneurs, turning out men like James McLamore and David Edgerton, co-founders of Burger King, and Michael Egan, who brought success to Alamo car rentals. Feeney got by financially by starting niche businesses and working odd jobs.
After graduation he headed to France on whose southern coast he started a business: a summer camp for the children of American naval personnel. While there, he discovered the business of selling duty-free liquor to sailors stationed in the Mediterranean. He recruited some Cornell friends, and the rest is history. In the coming years, he and a handful of colleagues would vastly expand their product line, narrowly escape numerous government agents and tax collectors, and occasionally make strategic mistakes. He eventually shifted his base of operations to the Pacific, where a swelling Japanese economy brought bargain-hungry tourists to foreign ports of call. With its duty-free line of products, DFS offered astonishingly low prices to shoppers from the protectionist Home Islands.
Amazingly, the tight-lipped business went unnoticed by the world for years. Few people had any idea how much Feeney and his three partners were earning. Some numbers give perspective: The Hong Kong DFS store generated sales 50 times higher per square foot than Harrod’s in London. Wall Street stocks averaged declines of 70 percent from 1968-74, while cash dividends to the DFS partners rose by several hundred percent a year. By 1982, DFS had $400 million in sales at its premier store in Waikiki, which was the size of an aircraft hangar and earned $20,000 per square foot, compared to Bloomingdale’s $800 in Manhattan. It took in so many dollars and yen that “a special department of currency traders was set up inside DFS to trade [the cash] on the overnight money markets.”
In 1984, Feeney secretly transferred nearly all his personal wealth to a Bermuda-based foundation. The transfer was estimated at between $500 million and $1 billion, and it formed only the beginning of the foundation’s wealth. Feeney’s investments continued to generate tremendous sums of money—$155 million in 1988 from DFS alone. As his attention turned to philanthropy and his personal net worth dropped below $5 million, Feeney kept racking up business successes, so much so that today his foundation struggles to ensure its investments don’t hit “extraordinary pay dirt” and ruin its effort to donate over $1 million per day in order to close its doors in the next decade.
Despite its flaws, the book does allow a reader to glimpse the qualities of an extraordinary entrepreneur. This breed delights in risk-taking, is restless, forward-looking, highly flexible, and full of energy. It is motivated not so much by money as by challenges, which are to be faced and overcome. Perhaps most interestingly, as Feeney’s life makes clear, this type is not coolly “professional.”
In fact, throughout the story nearly all brushes with the polished professional world show that their glossier world’s denizens are vastly inferior businessmen to the rougher, humbler sorts like Feeney and his partners. For example, consultants from McKinsey are hired to study DFS; when they arrogantly ignore the partners’ 63 years of experience and provide a worthless report, the mild-mannered Feeney walks out of the meeting. Later, white-shoe law firms make a bad situation worse. And, during a storm early in the business’s life, every executive with a professional credential abandons ship—only to see the partner with a mere 2 percent stake later join the Forbes 400 list.
Other important lessons in entrepreneurship the book provides are the need to treat colleagues with respect—Feeney excelled at this, and O’Clery finds him fondly remembered by employees around the world—and the value of being what many scoff at as a “middleman.” DFS never manufactured products but repeatedly found ways to serve customers through more cost-efficient means of distribution.
The highest entrepreneurial virtue, clearly evident in Feeney, is a mysterious sort of second sight. It’s related to ambition in that it dreams big, and is akin to what is typically called “intelligence,” but not the kind of number-crunching that many who sneer at businessmen imagine to be their secret. Rather, it’s a kind of intuition that senses opportunities where others do not, that recognizes a sea change coming from only the slightest shifts of current.
For example, in the 1970s, Feeney decided Saipan was a perfect place to expand his Asian operations, even though it was reachable only by “island-hopper” planes that “taxied up a dirt runway to a Quonset hut.” It had no resorts, no restaurants, no attractions—no tourism of any sort. DFS risked $5 million on developing the island, building the airport, setting up stores, cafés, and hotels. Soon, Saipan had 100,000 visitors a year.
Yet Feeney’s greatest intuition was sensing when DFS’s glory days were coming to a close. His partners, though fractious at the time, look back and see his timing was right once again—as does Louis Vuitton Moët Hennessy, which bought the business for billions just as sales began to plummet.
Little wonder Feeney’s philanthropy is marked by an entrepreneurial spirit, especially the entrepreneur’s hunt for other entrepreneurs. Feeney stumbled into a friendship, for instance, with a college president in Limerick. The Irish academic impressed him; Feeney later poured millions into the school. But, at a deeper level, Feeney saw these grants as part of a larger plan, sprung from love of his family’s homeland. He wanted to significantly improve the nation’s well-being by raising the quality of its entire higher education system, which he did with years of aggressive philanthropic investment that eventually reached every college on the Emerald Isle. Now Ireland is known as a “tiger,” and Ernst & Young’s Irish Entrepreneur of the Year award merits a prime-time TV show.
Feeney’s tale offers many other lessons for donors. Engage thoughtfully with grantees (“kick the tires,” as he likes to say). Look especially for energetic, entrepreneurial men and women. Give them the credit when they succeed. Encourage collaboration between your grantees, as Feeney did with universities around the globe. Avoid self-aggrandizement. Consider anonymous giving, but know that anonymity is a two-edged sword. (For years Feeney kept his philanthropy as fiercely secretive as he had his company, but anonymity wasn’t always helpful and eventually became impossible, especially at his scale.) When not acting anonymously, be as transparent as possible in your operations. Read Andrew Carnegie’s and Maimonides’s classic reflections on giving.
Feeney especially values the latter’s teaching that the highest form of giving is to help others “become self-sufficient through training and education.” Carnegie, too, urged donors to provide “the ladders upon which the aspiring can rise,” and Feeney has heeded that advice, as well as Carnegie’s call for “modest, unostentatious living.” Above all, Feeney has followed Carnegie in resolving to give away his wealth before he dies—partly to avoid the sclerosis which afflicts foundations as they age, partly to forestall the eventual abandonment of donor intent, but mostly because he believes that “giving while living” maximizes both the quality of philanthropy and its satisfactions.
While O’Clery does little more than drop hints about Feeney’s personality, we can hope some future biographer will give us deeper insights into the man’s remarkable character—including some fascinating paradoxes that O’Clery doesn’t even mention. I, for one, wonder how Feeney has moved leftward politically over his life, given that he seeks to spread self-reliance, has outfoxed taxmen the world over, and, according to an old friend, “believes people can do more with money than governments.” Is the shift related to the guilt many say Feeney feels over amassing his fortune?
Answers to such questions won’t likely be aided by Feeney, who avoids introspection and simply declares, “Fortune doesn’t change a man, it only unmasks him. I guess under the mask is a kid from Elmora wearing a baseball cap.”
Contributing editor Scott Walter recently left the White House Domestic Policy Council. A former vice president of The Philanthropy Roundtable, Walter now works with the Center for Union Facts and the Employment Policies Institute.